Michael Steinhardt is a legendary investor. In 1967, Steinhardt founded the hedge fund Steinhardt, Fine, Berkowitz & Co. From 1967 to 1995, the hedge fund returned 24.5% annually after fees.

There are multiple methods investment bankers and other financial analysts use to value a company. One frequently employed relative value method is comparable company analysis. Comparable company analysis is especially useful when valuing the minority, non-controlling interest of a company.

Comparable company analysis is rooted in the idea that companies with similar characteristics should have similar valuation multiples. Typically, a group of comparable companies includes companies from the same industry as the company being valued and companies with similar fundamentals.

Financial statements report the basic shares outstanding. However, when attempting to value a company’s market value of equity, fully diluted shares outstanding is used instead of the basic shares outstanding number. Fully diluted shares outstanding provides a better representation of how the market is implicitly valuing the company. Basic shares outstanding are the total shares that a company issued and are outstanding. This number is directly reported on the financial statements.

Marty Schwartz is another rock star trader profiled in Market Wizards. After completing his service in the Marine Corps, Schwartz earned a MBA at Columbia Business School. After graduation, Schwartz became a securities analyst. Following eight frustrating years as a securities analyst, Schwartz became a full time independent trader in 1979. The star trader achieved trading fame during the U.S Trading Championships, run by Norm Zadeh, a professor at Princeton University.

A summary and commentary of the previous weeks and next weeks August 19-21 economic indicators, including PPI and leading indicators.

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